State News:

Senate leader on how to use State’s $5.4B ARPA Allocation: Broadband & Brownfields: Not counting any American Rescue Plan Act funds to local governments, Ohio is expected to receive approximately $5.4B in federal COVID-19 relief stimulus funds. At the time of this writing, Ohio has received half ($2.7B) from the U.S. Treasury in the first tranche of funding; the funds must be committed by September 30. We expect these funds to be appropriated by the Ohio General Assembly in a stand-alone bill, outside the scope of the pending state operating budget (HB 110).

Federal News:

(Formal) bipartisan talks ended as of June 8 for federal infrastructure bill:  President Biden cut off negotiations with lead Republican negotiator, Senator Shelley Moore Capito of West Virginia, via phone call on Tuesday, June 8.  He made clear the gulf between the Senate Republicans and the Administration was too wide; the last counter-offer from Sen. Moore Capito was to add $50B to her last infrastructure spend amount. 

The move to inject significant federal spending to the county’s network of roads, bridges, water pipes and other physical infrastructure now will proceed either (1) under the Senate’s budget reconciliation process to avoid the filibuster or (2) via a group of centrist senators who have been working separately on their own infrastructure plan.  President Biden called the latter group individually and urged them to find a solution.

State News:

State Controlling Board creates new fund accounts to accept federal stimulus:  On April 19, the Controlling Board approved Ohio OBM’s request for three new funds to accept the American Rescue Plan Act’s state and local government stimulus payments:

• State Fiscal Recovery Fund (5CV3) – To accept funds allocated to the state of Ohio from the State Fiscal Recovery Fund from the American Rescue Plan Act. Ohio is estimated to receive approximately $5.5B from the U.S. Treasury to be used for costs incurred through December 31, 2024.  Payments are to be made to the State from the U.S. Treasury within 60 days of certification of need by Governor DeWine.
• Local Fiscal Recovery Fund (5CV4) – To accept funds allocated through the State of Ohio from the American Rescue Plan Act to non-entitlement units of local government. Ohio local governments are estimated to receive $815MM in funds to be distributed within 30 days of receiving the funds to the local governments.  Counties and metro cities will receive Local Fiscal Recovery Fund allocations directly from U.S. Treasury and will not pass through the Ohio OBM.
• Coronavirus Capital Projects Fund (5CV5) – To accept funds allocated to the State of Ohio from the Coronavirus Capital Projects Fund from the American Rescue Plan Act. Ohio is estimated to receive $274MM to carry out critical capital projects directly enabling work, education, and health monitoring, including remote options, in response to the public health emergency. The U.S. Treasury is required to establish the application process for the funds no later than 60 days after the legislation’s enactment.

Federal News: 

Searching for the signal within the white noise of economic data:  The change in the Consumer Price Index (CPI) in April unexpectedly jumped 4.2% year-to-year, its fastest pace of change since 2008.  On a monthly change basis, inflation rose by 0.8%.  The Federal Reserve Board, which has vowed action to keep inflation under control, was “surprised” by this recorded change in prices. 

The Fed and the Biden Administration’s economic advisors note that short-term inflation is to be expected as the economy awakens after a pandemic (which it has never done before).  Unlike previous eras of big government spending, the Fed now operates under a new mindset: accommodating a certain amount of short-term inflation, intervening to raise interest rates only if (1) inflation rises by 2% on a sustained basis over time, and (2) the economy reaches full employment (i.e., < 5% unemployment).

State News:

Ohio’s $162.57B biennial operating budget proceeds through the General Assembly: On April 13, the House Finance Committee accepted a substitute version of HB 110, which was introduced with Governor DeWine’s proposed two-year budget.  The House has made many changes, including a decades’ long legislative fix to Ohio’s K-12 school funding.  The budget is further described in the legislative updates, below.